Get Your Timing Right

Mark Suster is a two-time entrepreneur who has gone to "the dark side" of venture capital. He joined GRP Partners in 2007 as a general partner after selling his company to Salesforce.com. He focuses on early-stage technology companies. You can find him on Twitter @msuster.

This post talks about the last part of the PUCCKA methodology-- an Aligned Purchasing Process.

What does it mean for the purchasing process to be aligned?

Well think of it this way--you have your sales process. You know exactly when you want to sell to this customer and presumably it’s this quarter!

And with scarce resources it’s your job to decide which door this lead must go through - sales or marketing.

The buying company many not be able to buy in your time frames. And when I say this I’m assuming that you’re already identified the customer pain and talked about how you’re uniquely qualified to solve their business problems.

You’ve therefore “identified the need” and “gotten the need agreed.”

You might even have a “compelling event” that forces a buyer to believe they really need your solution now, now, now.

But the sales don’t always come in that way.

Why?

Like it or not enterprise customers have procurement processes, budgeting cycles, decision-making authority, competing interests for time & resources and key meetings that must take place in order for your sale to be approved.

It’s why many modern technology companies prefer to sell individual products to end-buyers who can buy on their credit cards with limited need for approval from others.

That is nice for one-off sales and / or to get your foot in the door of accounts. In order to get rolled out more widely, more pervasively and much more defensively (as in not being kicked out) you often need higher approval, official sanctioning, training budgets, champions, sponsors and internal marketing.

These all involve becoming part of a sales process. And I think of it as a failure of Silicon Valley startups (and occasionally SV VCs who lack an understanding of enterprise purchasing) to assume you don’t need a sales process and sales reps.

If you’re at a startup and new to sales & sales people you might want to read my basic primers:

But how do you know whether or not your prospect is ready to buy this quarter, what her approval levels are, who else needs to be involved in the decision, what key meetings have to take place in order to approval to happen, what the role of procurement and legal will eventually be?

If you read the post on “champions” you’d know that without an insider telling you all of this it’s nearly impossible to navigate corporate purchasing and you you’re potentially wasting valuable resources pursuing a campaign that might not close this quarter - or ever.

So the simplest rule in sales is … ask! I know it sounds trite but believe me when I tell you most people are afraid to ask direct questions like, “who holds the budget to invest in a solution like ours?” or “what is your financial approval authority?” or “are you able to approve a solution like this on your own? And if not, who else would we need to convince in order to secure a sale?”

They understand you’re there to sell your solution. So even if you don’t have a sales background you need to get over your stigma that you’re selling to somebody even though you thought you’d never be doing this.

They do not think you’re there just to be a nice guy. They know you want the business. It is not unspeakable.

Ask!

If they don’t want to share that information with you then they’re not your champion and you must continue in search of one in order to be worth investing resources in this account.

When asking you will quickly learn if this project is likely to slate for this quarter or in the future. If it is a current quarter opportunity you need to allocate the appropriate level of resources to getting your order finalized.

More often than not the account will be in an “interested but not yet ready to buy” state. So I like to tell sales reps: “your selling process is not aligned with their purchasing process.”

Hand this deal over to marketing to nurture for you. It doesn’t mean zero effort on your part but it means you need to allocate your own personal scarce resources to deals that are more near term or you’ll never close anything.

As a very early-stage startup person you’re used to rigorous prioritization on almost all other parts of your business because you likely work closely with product where these choice are natural. Or thinking about how much capital you have and therefore how many people you can hire - you rigorously prioritize.

Untrained people in sales are less good about prioritization - they like taking meetings with important people who are nice to them.

But you have no choice since in the first few years everything you do is about showing results to justify financing to continue your operations.

And failure to show customer adoption is the death of startup companies.

As the CEO I would work through my sales deals pipelines by doing “pipeline reviews” with individual sales reps and with regional managers.

In order for a deal to be forecast in the current quarter you had to have a champion, identified a budget holder with money to spend, presented the customer with an ROI (return on investment) calculation of the benefit of using our product and the customer had to be in an active review of choosing a supplier of document & collaboration services (the product we offered).

You could often tell when a sales person couldn’t defend having the deal be listed as an A deal (and thus have a high forecast percentage) by having them walk you through each deal. When I got busy and only had time to review spreadsheets or output from Salesforce.com it was impossible to know which deals were “real.”

We’d have deals that seemed “stuck” (were in the “closing within 3 months” pipeline for 9 months) or we’d have sales reps who constantly kept adding new deals and taking out the old “sure deals” that didn’t close.

Only pipeline reviews with tough questions and rigorous PUCCKA checklist helped us figure out how to prioritize our deals.

Lead quality matters because the scarcest resource of a sales rep is actually time. The reality is that no matter how much you want to sell your products, you can’t push them on a customer who isn’t ready to buy.

“A deals” (closing in next 3 months) should get much of the sales person’s time (say 66-75% of time), “B deals” (3-12 months) should get the balance as each sales rep needs to build their pipeline and bigger deals take time.

And the key to scaling is that “C deals” (1 year or more out) should get almost no time from sales. They should be owned by marketing.

The role of marketing in managing pipelines is to do two things 1) fill the top end of the funnel with new “qualified” leads (e.g. converted from “suspects” to “prospects”) and 2) managing “C deals.” Today’s C deals are obviously tomorrow’s A’s & B’s.

Managing C deals is called “nurturing.”

So the best run companies have marketing running activities to nurture their C deals. Examples activities:

Newsletters - one of the goals of newsletters is to keep your company & its products on the consciousness of your “suspects” or future buyers. C deals go in the newsletter bucket and should be identified as C newsletter companies. The things you send them should be different than the newsletters you send to existing customers, for example

Customer Events - It is far easier to get potential customers interested in your products when they hear actual customers talking about your products and how they are using them. Suspects & prospects are often in search of success stories from their peers to hear how they’re improving internal operations. So one of the smartest things we did at Salesforce.com was run “city tours” which were basically our existing customers standing up and talking about how they were using our products plus our product management teams talking about future innovation / development. Customer events are a great way to market to your C deals so that you keep them informed and try to raise their interest levels

PR - Some companies are excellent at PR and others don’t put much effort into it at all. I think PR is an incredibly important activity for technology companies and most companies aren’t very good at it. I wrote a bit about how to better manage journalist relations in this post. The reason many companies don’t put enough effort into PR is that PR doesn’t have an immediate translation into sales because it’s most a “C deal” activity.

Analyst Relations - In many technology fields analysts are hugely influential in determining enterprise budgets. Many analysts are great and help customers frame the decisions they need to reach. Spending time with analysts getting into their “innovator quadrants” will help you manage your C deals and pull them forward to B’s & A’s.

So there you have it: PUCCKA.

A = make sure to “ask” you customers what their purchasing process is to make sure you’re “aligned” and therefore can continue to spend sales resources in stead of marketing resources.

PUCCKA is by no means the only sales methodology and it borrowed heavily for sales books and training programs we had all been on.

To have NO process or methodology and give no thought to suspects, prospects, leads and current customer accounts is madness. A surefire way to build a product that isn’t consumed as much as it could be.